November 11, 2021
I wanted to say a bit more about the New York Times piece on the shortage of truck drivers and how this is the biggest factor causing the current supply chain problems. In an earlier post, I pointed out that the real hourly wage for truckers has dropped by more than 5 percent since 1990. If we are wondering why there is a shortage of drivers, this would be an obvious place to start.
But the drop in pay is just part of the story. The industry is far less unionized than it was back in the 1970s, when President Carter began to deregulate trucking.
Not having a union means that truckers have far less control over their working conditions. That’s a big deal in trucking. Without a union to stand behind them, truckers can be forced to work irregular shifts and long hours. They can be forced to drive in all sorts of weather. They can also be forced to drive trucks that they don’t think are safe due to bad brakes or other issues.
In addition, there has been an enormous increase in the number of independent truckers who own their trucks. For the most part, these should not be thought of as being small businesses, but rather like Uber or Lyft drivers. The large shipping companies contract with these drivers and control almost everything about their work conditions. This can mean that they require them to wait, often many hours, for a shipment to unload and then be transported to a store or warehouse.
Since a contract will typically pay by the mile, if the time spent waiting is factored into the equation, the hourly pay for these drivers will often be very low, possibly even less than the minimum wage. That doesn’t matter, however, since these truckers are classified as independent contractors, not employees. This means that the minimum wage does not apply to them, nor are they eligible for unemployment benefits if they can’t find work, or workers’ compensation if they are injured on the job.
In short, trucking doesn’t look like a very lucrative occupation these days. It’s not surprising that workers are not lining up for the job.
But this problem comes with an obvious solution. Employers have to pay higher wages and offer better working conditions. (There also is a huge issue with sexism, less than 10 percent of truckers are women.)
For some reason, this solution does not feature prominently in the article. The piece does tell us:
“In response, the companies have raised their wages. The average weekly earnings for long-distance drivers have increased about 21 percent since the start of 2019, according to the Bureau of Labor Statistics. Last year, commercial truck drivers had a median wage of $47,130.”
Real hourly wages for truck drivers have risen somewhat over the last two years but still are well below the level of thirty years ago. It is also important to note that average weekly hours have increased by around 5 percent since 2019. This increase would account for almost a quarter of the increase in the nominal weekly wage over the last two years and more than one-third of the real increase. So even the pay increase over the last two years is not quite as impressive as the article implies.
How Much Should Truckers Be Paid?
Later in the piece, the article tells readers of a trucking company that says it pays an average wage of $70,000 a year. It then describes the situation of a trucker, earning $75, 000 to $85,000 a year, who is unhappy with his work schedule, but probably won’t quit.
These numbers are presumably supposed to tell us that trucking is a high-paying occupation. While these pay figures are certainly far more than workers will earn in most other jobs that do not require a college degree, they are not especially high. These truckers almost certainly work far more than forty hours a week on average. If we assume an average of 50 hours a week for these jobs, a $75,000 annual wage would come to $30 an hour, even assuming no premium for overtime pay.
It is also important to realize that we have seen an enormous upward redistribution of wage income over the last four decades. If the minimum wage had kept pace with productivity growth since its peak value in 1968 (when the unemployment rate was less than 4.0 percent), it would be over $26 an hour today. That would come to $52,000 a year for a fifty-week year, in which workers put in 40 hours a week. In that context, putting in a lot of overtime, and getting $70,000 to $80,000 a year, doesn’t sound especially good.
But let’s give the question of truckers’ pay a bit more thought. The piece tells us:
“The shortage has alarmed trucking companies, which say there are not enough young people to replace those aging out of the work force. The stereotypes attached with the job, the isolating lifestyle and younger generations’ focus on pursuing four-year college degrees have made it difficult to entice drivers. Trucking companies have also struggled to retain workers: Turnover rates have reached as high as 90 percent for large carriers.”
The idea is that this is not just a short-term problem, but a long-term one that may actually get worse. That is bizarre. There is some training needed to drive a truck, but we’re talking weeks and months, not years.
Suppose that truckers got $150,000 a year and worked something like regular 40-hour weeks, and weren’t forced to drive unsafe trucks in unsafe conditions? Does anyone think the industry would have a hard time finding enough people to work as truckers? (Actually, if truckers’ pay had kept pace with productivity growth over the last four decades it would be somewhere around $150k a year today.)
The point here is that the trucker shortage is overwhelmingly a problem of inadequate pay. This is what the market is telling us. But rather than listen to the market, we get a grand tour of other possible solutions. Why does the NYT have such a hard time listening to the market?
This seems like just another case of prejudice against workers who do not have college degrees. It’s true that higher pay for truckers would get passed on in the prices of a wide range of goods. But the $300,000 plus average pay of physicians gets passed on to us in the cost of our health care insurance. And the millions of dollars that private equity partners and hedge fund partners get paid to lose pension fund and university endowments money leads to higher prices for houses and other items, as they outbid normal workers. And government-granted patent monopolies cost us hundreds of billions in higher drug prices.
In these, and other areas, we have policies that make a relatively small number of people very wealthy, but that is not supposed to concern us. But the idea that we might have to pay truck drivers something like $150,000 a year, and therefore incur higher costs, is somehow intolerable.
Sorry folks, this is class bias pure and simple. When the market is telling the NYT something it does not want to hear, it just chooses to ignore the market.
The market may not always be right, but we should be clear on where we are willing to listen to market signals (given how we have structured it) and when we are not. When the market is telling us that a particular type of work done by less-educated workers needs to be much more highly compensated, this is a message that NYT editors do not want to hear.